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Why Is Inter Parfums (IPAR) Down 6.9% Since Last Earnings Report?
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A month has gone by since the last earnings report for Inter Parfums (IPAR - Free Report) . Shares have lost about 6.9% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Inter Parfums due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Inter Parfums Q2 Earnings Top, Sales Up on Robust Demand
Inter Parfums posted impressive second-quarter 2024 results, with the bottom line increasing year over year and surpassing the Zacks Consensus Estimate. Quarterly sales increased owing to strength in U.S.-based and Europe-based operations.
Sales benefited from continued momentum in the fragrance market, the strength of its legacy brands, the rapid ramp-up of its new brands, effective advertising and promotional efforts and its extensive global distribution network. IPAR's strategic approach to balancing product launches with advertising and promotional investments is proving effective and management expects continued momentum in the second half of the year. Management reaffirmed its 2024 guidance.
Results in Detail
Inter Parfums posted earnings of $1.14 per share, up 5% from the year-ago quarter’s figure. The metric surpassed the Zacks Consensus Estimate of $1.07 per share.
Quarterly net sales reported an 11% year-over-year increase, reaching $342 million. In an earlier press release, the company announced that the U.S.-based net sales amounted to $120 million, up 8% from second-quarter 2023 levels. Inter Parfums’ Europe-based net sales came in at $226 million, up 14% from the year-ago levels.
Sales growth in the Europe-based operations was predominantly fueled by Jimmy Choo, which registered a 31% increase in sales. In the second quarter, Montblanc brand sales saw a slight decline. The Montblanc Explorer line and the new Legend Blue (launched in early 2024) are performing well. Demand remained strong for the Coach brand's established lines. Several Inter Parfums’ medium-sized brands had a strong second quarter, with Karl Lagerfeld and Rochas recording a 13% increase in fragrance sales each.
Growth in its U.S. operations was driven by strong performances from the company’s two largest brands, GUESS and Donna Karan/DKNY. In the quarter, the Ferragamo brand saw minimal growth in sales as the company expanded the Signorina line with Signorina Unica. MCM achieved strong double-digit growth, driven by the successful launch of MCM Crush. The company's latest additions, Lacoste and Roberto Cavalli, met management's expectations.
Costs & Margins
Coming back to the current release, IPAR’s consolidated gross margin came in at 64.5%, up 360 basis points (bps) from 60.9% reported in the year-ago quarter. For European operations, the gross margin expanded by 570 bps on the back of a favorable mix of segments, geographies, and channels, along with a one-time charge for inventory reserves recorded in 2023. Excluding this inventory reserve, the gross margin grew by 250 bps. For its U.S.-based operations, the gross margin declined to 56.5% in second-quarter 2024, down from 57.2% in the same period of 2023, due to a slightly less favorable brand mix.
Inter Parfums’ SG&A expenses were $155.9 million, up from the $133.4 million reported in the year-ago quarter. SG&A expenses, as a percentage of net sales, were 45.6% in the second quarter, up from 43.1% in the same period of 2023. This increase was primarily due to higher promotional and advertising costs, which accounted for 19.4% of quarterly net sales. Advertising and promotional expenditures are expected to form nearly 21% of net sales in full-year 2024.
The company’s operating income came in at $65 million, up from the $55 million reported in the year-ago quarter. The operating margin came in at 18.9% compared with the 17.8% reported in the year-ago quarter.
Other Financial Aspects
Inter Parfums ended the quarter with cash and cash equivalents of almost $39 million, long-term debt (excluding the current portion) of $108.5 million and total equity of $901.2 million.
Guidance
Despite the global fragrance market's continued vibrancy and strong demand for IPAR's products, sell-in is growing more slowly than sell-out, and the company is still facing challenges in Eastern Europe. Given the dynamic backdrop and despite its record second-quarter sales and strong earnings, management is reaffirming its 2024 guidance, which projects net sales of $1.45 billion and earnings per diluted share of $5.15.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended downward during the past month.
The consensus estimate has shifted -6.29% due to these changes.
VGM Scores
Currently, Inter Parfums has a great Growth Score of A, though it is lagging a bit on the Momentum Score front with a B. However, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Inter Parfums has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Why Is Inter Parfums (IPAR) Down 6.9% Since Last Earnings Report?
A month has gone by since the last earnings report for Inter Parfums (IPAR - Free Report) . Shares have lost about 6.9% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Inter Parfums due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Inter Parfums Q2 Earnings Top, Sales Up on Robust Demand
Inter Parfums posted impressive second-quarter 2024 results, with the bottom line increasing year over year and surpassing the Zacks Consensus Estimate. Quarterly sales increased owing to strength in U.S.-based and Europe-based operations.
Sales benefited from continued momentum in the fragrance market, the strength of its legacy brands, the rapid ramp-up of its new brands, effective advertising and promotional efforts and its extensive global distribution network. IPAR's strategic approach to balancing product launches with advertising and promotional investments is proving effective and management expects continued momentum in the second half of the year. Management reaffirmed its 2024 guidance.
Results in Detail
Inter Parfums posted earnings of $1.14 per share, up 5% from the year-ago quarter’s figure. The metric surpassed the Zacks Consensus Estimate of $1.07 per share.
Quarterly net sales reported an 11% year-over-year increase, reaching $342 million. In an earlier press release, the company announced that the U.S.-based net sales amounted to $120 million, up 8% from second-quarter 2023 levels. Inter Parfums’ Europe-based net sales came in at $226 million, up 14% from the year-ago levels.
Sales growth in the Europe-based operations was predominantly fueled by Jimmy Choo, which registered a 31% increase in sales. In the second quarter, Montblanc brand sales saw a slight decline. The Montblanc Explorer line and the new Legend Blue (launched in early 2024) are performing well. Demand remained strong for the Coach brand's established lines. Several Inter Parfums’ medium-sized brands had a strong second quarter, with Karl Lagerfeld and Rochas recording a 13% increase in fragrance sales each.
Growth in its U.S. operations was driven by strong performances from the company’s two largest brands, GUESS and Donna Karan/DKNY. In the quarter, the Ferragamo brand saw minimal growth in sales as the company expanded the Signorina line with Signorina Unica. MCM achieved strong double-digit growth, driven by the successful launch of MCM Crush. The company's latest additions, Lacoste and Roberto Cavalli, met management's expectations.
Costs & Margins
Coming back to the current release, IPAR’s consolidated gross margin came in at 64.5%, up 360 basis points (bps) from 60.9% reported in the year-ago quarter. For European operations, the gross margin expanded by 570 bps on the back of a favorable mix of segments, geographies, and channels, along with a one-time charge for inventory reserves recorded in 2023. Excluding this inventory reserve, the gross margin grew by 250 bps. For its U.S.-based operations, the gross margin declined to 56.5% in second-quarter 2024, down from 57.2% in the same period of 2023, due to a slightly less favorable brand mix.
Inter Parfums’ SG&A expenses were $155.9 million, up from the $133.4 million reported in the year-ago quarter. SG&A expenses, as a percentage of net sales, were 45.6% in the second quarter, up from 43.1% in the same period of 2023. This increase was primarily due to higher promotional and advertising costs, which accounted for 19.4% of quarterly net sales. Advertising and promotional expenditures are expected to form nearly 21% of net sales in full-year 2024.
The company’s operating income came in at $65 million, up from the $55 million reported in the year-ago quarter. The operating margin came in at 18.9% compared with the 17.8% reported in the year-ago quarter.
Other Financial Aspects
Inter Parfums ended the quarter with cash and cash equivalents of almost $39 million, long-term debt (excluding the current portion) of $108.5 million and total equity of $901.2 million.
Guidance
Despite the global fragrance market's continued vibrancy and strong demand for IPAR's products, sell-in is growing more slowly than sell-out, and the company is still facing challenges in Eastern Europe. Given the dynamic backdrop and despite its record second-quarter sales and strong earnings, management is reaffirming its 2024 guidance, which projects net sales of $1.45 billion and earnings per diluted share of $5.15.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended downward during the past month.
The consensus estimate has shifted -6.29% due to these changes.
VGM Scores
Currently, Inter Parfums has a great Growth Score of A, though it is lagging a bit on the Momentum Score front with a B. However, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Inter Parfums has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.